Amidst lower Iranian exports, oil prices are dropping, pushed by mounting tensions between Saudi Arabia and the US in the wake of the Khashoggi murder. Brent Crude is below USD 80/barrel while WTI trades below USD 70, both under last weekend’s levels. Investors were hoping that Saudi, the world’s leading exporter, would use its black gold to make itself heard politically. However, Saudi Energy Minister Khalid Al-Falih confirmed intentions to produce 11 million barrels per day and its unwillingness to implement any embargo. Meanwhile, US inventories published Wednesday for the week ending 19 October are expected to remain in positive territory, where they have been since March 2017.
Still, the global landscape has not changed fundamentally. US sanctions against Iran exports start in 12 days (4 November 2018), and sanctions against Venezuela are ramping up. In the short-term, crude prices are expected to drop slightly, but looking ahead, a bounce is likely.
By Vincent Mivelaz